DRAPER — An upstart operation done in by bigger forces? A revolutionary company that lost uphill battles on several fronts? A financially troubled firm whose rocky start eventually will be seen as a blip on the way to ultimate success?
Regardless of how a person might view U.S. Digital Television LLC, its founder and chief executive officer said Tuesday that the TV programming provider's history is not yet fully written, despite the expectation that the company will be acquired through bankruptcy court proceedings.
Steve Lindsley said Tuesday that he expects USDTV to continue to grow after the sale.
"We'll get through this period here and then emerge hopefully stronger than ever," he said.
The provider of low-cost, wireless, digital TV service filed for Chapter 7 bankruptcy July 6 in Delaware. A bankruptcy court trustee, Alfred Thomas Giuliano
of Marlton, N.J., is seeking a court order allowing him to keep the service operating until a company sale can be completed, Lindsley said. Several third-party investment groups have expressed interest in acquiring USDTV, and "our management team has aligned itself with one of the top investor groups and believes that they will win the bid process of acquiring the company," Lindsley said.
"We very much look forward to progressing with our dream of providing consumers with a low-cost, family-friendly alternative to cable and satellite."
Lindsley declined to identify that investor group but said it has telecommunication interests — "more than just video, but also broadband and telephony interests."
The likely outcome is that the buyer will purchase USDTV from bankruptcy and continue the service. "Who that will be has yet to be determined, but we believe a group we're familiar with . . . is motivated to pick up a robust video offering because they have Internet and phone plans and need video to complete the triple-play bundle."
A creditors meeting will take place Aug. 3. Lindsley said the new owners likely will be known by late August and take over operations Sept. 1.
As for his role going forward, "that's in the hands of the new owners," he said. "But I anticipate a role on the management team, if not the CEO of the combined initiatives."
Formed in June 2003 and commercially launched in December 2005, USDTV leases portions of the digital spectrum from local television stations. Customers with a set-top box and antenna receive about 30 channels of "off-the-air" wireless digital TV service for $19.95 monthly as a low-cost alternative to cable or satellite TV.
The company reportedly had about 6,000 subscribers in Utah, part of a group of 16,000 in Salt Lake City, Dallas, Albuquerque and Las Vegas.
USDTV continues to provide service, and Lindsley expects that to continue. Prior to the bankruptcy filing, USDTV had about 120 employees, including about 50 in Utah. A skeleton crew remains, but Lindsley said he expects the company's call center to be operating in "a number of days" to allow customers to report problems or ask questions.
"It has been incredibly frustrating," he said of the company's recent situation. "My heart goes out to employees, partners, all the stakeholders, investors — everybody who believed in us and supported us. We are not through with the fight."
USDTV's effort was backed by $25.75 million from several partners, including Fox Television Stations Inc., Hearst-Argyle Television Inc., McGraw-Hill Broadcasting, LIN TV Corp., Morgan Murphy Stations and Telcom DTV LLC. Bankruptcy court documents indicate the company had estimated assets of between $1 million and $10 million. Lindsley declined Tuesday to be more specific about the assets but said the estimated debt was about $15 million.
Lindsley acknowledged that the young company had sporadic technical problems and a troublesome transition to a new billing system in May and early June. But he put the blame for the company's woes squarely on new broadcast partners that were expected to jump aboard USDTV's vision.
"The initial group was comfortable with our performance, but it was new funding sources, namely new broadcast partners, who would not step up and move the company forward," he said.
USDTV was "well on its way of proving the business model of a low-cost alternative" to cable service, he said, but the broadcast industry was unwilling to compete directly with cable.
Broadcasters and cable operators have been battling in federal government circles about whether cable will be forced to carry broadcasters' second digital channels on cable systems, Lindsley said. Broadcasters became nervous about possible investment in USDTV while that battle waged — "in other words, to take on cable directly with a cable product," he said.
Broadcasters also were worried that cable companies would refuse to clear new content offerings in local markets on their cable systems or not spend advertising money with broadcasters lined up with USDTV.
"Throughout the political and regulatory and competitive issues over the last seven months, it became clear that other broadcasters were concerned about taking on cable head-on, so they decided not to invest with the initial group. Ultimately, that's what sent the company into bankruptcy," Lindsley said.
"There was was really no way to adjust quickly enough to find other financing alternatives, and it was very frustrating to us."
He said he remains proud of the USDTV management team and its ability to develop the service, build content relationships, develop technology and forge distribution agreements.
"The key pieces were built from scratch, and I'm very proud of what we've been able to accomplish, and to have over 16,000 homes enjoy USDTV is a real testament to the work of our people," he said. "This has been a dream of our team and a hard-fought battle for many years. We're anxious as a management team to be able to get to our personal victory of providing this service to potentially millions of homes across America."
E-mail: bwallace@desnews.com